54STAT.] 76TH CONG. , 3D SESS.-CH. 757-OCT. 8 , 1940 "(b) TRANSFEROR UPON AN EXCHANGE.- The term 'transferor upon an exchange' means a corporation which upon an exchange transfers property to another corporation in exchange, wholly or m part, for stock or securities of such other corporation, or transfers property to another corporation after December 31, 1917, the basis of which in the hands of such other corporation is or was determined under section 113 (a) (8) (B), or would have been so determined had such section been in effect. "(c) TRANSFEREE UPON AN EXCHANGE.- The term 'transferee upon an exchange' means a corporation which upon an exchange acquires property from another corporation in exchange, wholly or in part, for its stock or securities, or which acquires property from another corporation after December 31, 1917, the basis of which in its hands is or was determined under section 113 (a) (8) (B), or would have been so determined had such section been in effect. "(d) CONTROL. -T he term 'control' means the ownership of stock possessing at least 90 per centum of the total combined voting power of all classes of stock entitled to vote and at least 90 per centum of the total value of shares of all classes of stock of the corporation. "(e) HIGHEST BRACKET AMoUNT.- T he term 'highest bracket amount' means $500,000 or the highest bracket amount computed under section 752, whichever is the smaller. "SEC. 751. DETERMINATION OF PROPERTY PAID IN FOR STOCK AND OF BORROWED CAPITAL IN CONNECTION WITH CER- TAIN EXCHANGES. "(a) PROPERTY PAD IN FOR STOCK.- In the application of section 718 (a) to a transferee upon an exchange in determining the amount paid in for stock of the transferee, or as paid-in surplus or as a con- tribution to capital of the transferee, in connection with such exchange, only an amount shall be deemed to have been so paid in equal to the excess of the basis in the hands of the transferee of the property of the transferor received by the transferee upon the exchange over the sum of- "(1) Any liability of the transferor assumed upon such exchange and any liability subject to which the property was received upon such exchange, plus "(2) The aggregate of the amount of money and the fair market value of any other property transferred to the transferor not permitted to be received by such transferor without the recog- nition of gain. "(b) BORROWED CAPITAL. -In the application of section 719 (a) to a transferee upon an exchange, the term 'borrowed capital' shall not include indebtedness originally evidenced by securities issued by the transferee upon such exchange as consideration for the property of the transferor received by the transferee upon such exchange if (1) such securities were property permitted to be received by the person to whom such securities were issued without the recognition of gain and (2) the indebtedness originally evidenced by such securi- ties did not arise out of indebtedness of the transferor (other than indebtedness which in the transferor's hands was subject to the limi- tations of this subsection) assumed by the transferee in connection with such exchange. "SEC. 752. COMPUTATION OF HIGHEST BRACKET AMOUNT IN CON- NECTION WITH EXCHANGES. "(a) SPECIAL APPLICATION OF DAILY INVESTED CAPITAL OF TRANS- FEROR UPON EXCHANGE. -For the purposes of this section, the daily invested capital of a transferor upon an exchange for the day after 995 "Transeror upon an exchange." 53 Stat. 42 . 26 U. S. 0., Snpp. v, 113 (a) (8) (B). "Transferee upon an exchange." 53 Stat. 42. 26 U. S. 0., Supp. V, 113 (a) (8) (B). "Control." "Highest bracket amount." Property paid In for stock. Ante, p. 982. Borrowed capital. Ante, p. 984. Daily invested capi- tal of transferor.
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